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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2024

or

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from __________________ to __________________

Commission file number: 000-15746

VIEWBIX INC.

(Exact Name Of Registrant As Specified In Its Charter)

Delaware |  | 68-0080601
(State of |  | (I.R.S. Employer
Incorporation) |  | Identification Number)

11 Derech Menachem Begin Street, Ramat Gan, Israel |  | 5268104
(Address of Principal Executive Officers) |  | (Zip Code)

Registrant’s Telephone Number, Including Area Code: +972 9-774-1505

Securities registered pursuant to Section 12(b) of the Act:

Title of each class |  | Trading Symbol(s) |  | Name of each exchange on which registered
N/A |  | N/A |  | N/A

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer (as defined in Rule 12b-2 of the Exchange Act) or a smaller reporting company.

Large accelerated filer | ☐ | Accelerated filer | ☐
Non-accelerated filer | ☒ | Smaller reporting company | ☒
|  | Emerging growth company | ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

On May 19, 2024, the Registrant had 14,920,585 shares of common stock issued and outstanding.

VIEWBIX INC.

TABLE OF CONTENTS

Item |  | Description |  | Page
|  | PART I - FINANCIAL INFORMATION |  |
ITEM 1. |  | FINANCIAL STATEMENTS |  | 3
ITEM 2. |  | MANAGEMENT’S DISCUSSION AND ANALYSIS AND RESULTS OF OPERATIONS |  | 23
ITEM 3. |  | QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK |  | 30
ITEM 4. |  | CONTROLS AND PROCEDURES |  | 30
|  | PART II - OTHER INFORMATION |  |
ITEM 1. |  | LEGAL PROCEEDINGS |  | 31
ITEM 1A. |  | RISK FACTORS |  | 31
ITEM 2. |  | UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS |  | 32
ITEM 3. |  | DEFAULT UPON SENIOR SECURITIES |  | 32
ITEM 4. |  | MINE SAFETY DISCLOSURE |  | 32
ITEM 5. |  | OTHER INFORMATION |  | 32
ITEM 6. |  | EXHIBITS |  | 32
|  | SIGNATURES |  | 33

-2-

PART I - FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

VIEWBIX INC.

INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

March 31, 2024

CONTENTS

| Page
Interim Condensed Consolidated Balance Sheets (unaudited) | 4 - 5
Interim Condensed Consolidated Statements of Operations (unaudited) | 6
Interim Condensed Consolidated Statements of Changes in Shareholders’ Equity (unaudited) | 7
Interim Condensed Consolidated Statements of Cash Flows (unaudited) | 8 - 9
Notes to the Interim Condensed Consolidated Financial Statements (unaudited) | 10 - 22

-3-

VIEWBIX INC.

INTERIM CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited)

U.S. dollars in thousands (except share data)

|  |  |  |  | As of March 31 |  |  | As of December 31 |
|  | Note |  |  | 2024 |  |  | 2023 |
ASSETS |  |  |  |  |  |  |  |  |  |  |  |
CURRENT ASSETS |  |  |  |  |  |  |  |  |  |  |  |
Cash and cash equivalents |  |  |  |  |  |  | 1,284 |  |  |  | 1,774 |
Restricted deposits |  |  |  |  |  |  | 86 |  |  |  | 149 |
Accounts receivable |  |  |  |  |  |  | 7,004 |  |  |  | 11,359 |
Loan to parent company |  |  | 3 |  |  |  | 3,808 |  |  |  | 3,752 |
Other current assets |  |  |  |  |  |  | 623 |  |  |  | 771 |
Total current assets |  |  |  |  |  |  | 12,805 |  |  |  | 17,805 |
NON-CURRENT ASSETS |  |  |  |  |  |  |  |  |  |  |  |
Deferred taxes |  |  |  |  |  |  | 144 |  |  |  | 147 |
Property and equipment, net |  |  |  |  |  |  | 230 |  |  |  | 245 |
Operating lease right-of-use asset |  |  | 4 |  |  |  | 374 |  |  |  | 397 |
Intangible assets, net |  |  | 5 |  |  |  | 11,715 |  |  |  | 12,434 |
Goodwill |  |  | 5 |  |  |  | 12,254 |  |  |  | 12,254 |
Total non-current assets |  |  |  |  |  |  | 24,717 |  |  |  | 25,477 |
Total assets |  |  |  |  |  |  | 37,522 |  |  |  | 43,282 |

The accompanying notes are an integral part of these Interim Condensed Consolidated financial statements.

-4-

VIEWBIX INC.

INTERIM CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) (Cont.)

U.S. dollars in thousands (except share data)

|  |  |  |  | As of March 31 |  |  | As of December 31 |
|  | Note |  |  | 2024 |  |  | 2023 |
LIABILITIES AND SHAREHOLDERS’ EQUITY |  |  |  |  |  |  |  |  |  |  |  |
CURRENT LIABILITIES |  |  |  |  |  |  |  |  |  |  |  |
Accounts payable |  |  |  |  |  |  | 8,407 |  |  |  | 12,359 |
Short-term loans |  |  | 6 |  |  |  | 4,357 |  |  |  | 5,000 |
Current maturities of long-term loans |  |  | 6 |  |  |  | 2,065 |  |  |  | 1,440 |
Other payables |  |  |  |  |  |  | 988 |  |  |  | 889 |
Operating lease liabilities - short term |  |  | 4 |  |  |  | 83 |  |  |  | 85 |
Total current liabilities |  |  |  |  |  |  | 15,900 |  |  |  | 19,773 |
NON-CURRENT LIABILITIES |  |  |  |  |  |  |  |  |  |  |  |
Long-term loans, net of current maturities |  |  | 6 |  |  |  | 2,441 |  |  |  | 3,064 |
Operating lease liabilities - long term |  |  | 4 |  |  |  | 281 |  |  |  | 304 |
Deferred taxes |  |  |  |  |  |  | 1,433 |  |  |  | 1,517 |
Total non-current liabilities |  |  |  |  |  |  | 4,155 |  |  |  | 4,885 |
Commitments and Contingencies |  |  | 7 |  |  |  | - |  |  |  | - |
SHAREHOLDERS’ EQUITY |  |  | 8 |  |  |  |  |  |  |  |  |
Common stock of $0.0001 par value - Authorized: 490,000,000 shares; Issued and outstanding: 14,920,585 shares as of March 31, 2024, and December 31, 2023. |  |  |  |  |  |  | 3 |  |  |  | 3 |
Additional paid-in capital |  |  |  |  |  |  | 25,482 |  |  |  | 25,476 |
Accumulated deficit |  |  |  |  |  |  | (11,660 | ) |  |  | (10,661 | )
Equity attributed to shareholders of Viewbix Inc. |  |  |  |  |  |  | 13,825 |  |  |  | 14,818 |
Non-controlling interests |  |  |  |  |  |  | 3,642 |  |  |  | 3,806 |
Total equity |  |  |  |  |  |  | 17,467 |  |  |  | 18,624 |
Total liabilities and shareholders’ equity |  |  |  |  |  |  | 37,522 |  |  |  | 43,282 |

The accompanying notes are an integral part of these Interim Condensed Consolidated financial statements.

-5-

VIEWBIX INC.

INTERIM CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)

U.S. dollars in thousands (except share data)

|  | 2024 |  |  | 2023 |
|  | For the three months ended March 31, |
|  | 2024 |  |  | 2023 |
Revenues |  |  | 10,002 |  |  |  | 20,862 |
Costs and Expenses: |  |  |  |  |  |  |  |
Traffic-acquisition and related costs |  |  | 8,215 |  |  |  | 17,981 |
Research and development |  |  | 730 |  |  |  | 796 |
Selling and marketing |  |  | 658 |  |  |  | 723 |
General and administrative |  |  | 656 |  |  |  | 704 |
Depreciation and amortization |  |  | 734 |  |  |  | 734 |
Other expenses |  |  | 20 |  |  |  | - |
Operating loss |  |  | (1,011 | ) |  |  | (76 | )
Financial expense, net |  |  | 163 |  |  |  | 185 |
Loss before income taxes |  |  | (1,174 | ) |  |  | (261 | )
Income tax expense |  |  | 1 |  |  |  | 84 |
Net loss |  |  | (1,175 | ) |  |  | (345 | )
Less: net income (loss) attributable to non-controlling interests |  |  | (176 | ) |  |  | 52 |
Net loss attributable to shareholders of Viewbix Inc. |  |  | (999 | ) |  |  | (397 | )
Net income per share – Basic and diluted attributed to shareholders: |  |  | (0.07 | ) |  |  | (0.03 | )
Weighted average number of shares – Basic and diluted: |  |  | 14,920,585 |  |  |  | 14,783,964 |

The accompanying notes are an integral part of these Interim Condensed Consolidated financial statements.

-6-

VIEWBIX INC.

INTERIM CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY (Unaudited)

U.S. dollars in thousands (except share data)

|  | Common stock |  |  | Additional paid-in |  |  | Accumulated |  |  | Total Attributed to the company’s |  |  | Non- Controlling |  |  | Total |
|  | Number |  |  | Amount |  |  | capital |  |  | Deficit |  |  | Shareholders |  |  | Interests |  |  | Equity |
Balance as of January 1, 2024 |  |  | 14,920,585 |  |  |  | 3 |  |  |  | 25,476 |  |  |  | (10,661 | ) |  |  | 14,818 |  |  |  | 3,806 |  |  |  | 18,624 |
Net loss |  |  | - |  |  |  | - |  |  |  | - |  |  |  | (999 | ) |  |  | (999 | ) |  |  | (176 | ) |  |  | (1,175 | )
Share-based compensation |  |  | - |  |  |  | - |  |  |  | 6 |  |  |  | - |  |  |  | 6 |  |  |  | 12 |  |  |  | 18 |
Balance as of March 31, 2024 |  |  | 14,920,585 |  |  |  | 3 |  |  |  | 25,482 |  |  |  | (11,660 | ) |  |  | 13,825 |  |  |  | 3,642 |  |  |  | 17,467 |

|  | Common stock |  |  | Additional paid-in |  |  | Accumulated |  |  | Total Attributed to the company’s |  |  | Non- Controlling |  |  | Total |
|  | Number |  |  | Amount |  |  | capital |  |  | Deficit |  |  | Shareholders |  |  | Interests |  |  | Equity |
Balance as of January 1, 2023 |  |  | 14,783,964 |  |  |  | 3 |  |  |  | 25,350 |  |  |  | (3,338 | ) |  |  | 22,015 |  |  |  | 7,884 |  |  |  | 29,899 |
Balance |  |  | 14,783,964 |  |  |  | 3 |  |  |  | 25,350 |  |  |  | (3,338 | ) |  |  | 22,015 |  |  |  | 7,884 |  |  |  | 29,899 |
Net income (loss) |  |  | - |  |  |  | - |  |  |  | - |  |  |  | (397 | ) |  |  | (397 | ) |  |  | 52 |  |  |  | (345 | )
Share-based compensation |  |  | - |  |  |  | - |  |  |  | 24 |  |  |  | - |  |  |  | 24 |  |  |  | 6 |  |  |  | 30 |
Transaction with the non-controlling interests (see note 1.C) |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | (2,625 | ) |  |  | (2,625 | )
Balance as of March 31, 2023 |  |  | 14,783,964 |  |  |  | 3 |  |  |  | 25,374 |  |  |  | (3,735 | ) |  |  | 21,642 |  |  |  | 5,317 |  |  |  | 26,959 |
Balance |  |  | 14,783,964 |  |  |  | 3 |  |  |  | 25,374 |  |  |  | (3,735 | ) |  |  | 21,642 |  |  |  | 5,317 |  |  |  | 26,959 |

The accompanying notes are an integral part of these Interim Condensed Consolidated financial statements.

-7-

VIEWBIX INC.

INTERIM CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)

U.S. dollars in thousands (except share data)

|  | 2024 |  |  | 2023 |
|  | For the three months ended March 31, |
|  | 2024 |  |  | 2023 |
Cash flows from Operating Activities |  |  |  |  |  |  |  |
Net loss |  |  | (1,175 | ) |  |  | (345 | )
Adjustments to reconcile net income to net cash provided by (used in) operating activities: |  |  |  |  |  |  |  |
Depreciation and amortizations |  |  | 734 |  |  |  | 734 |
Share-based compensation |  |  | 18 |  |  |  | 30 |
Deferred taxes |  |  | (81 | ) |  |  | (58 | )
Accrued interest, net |  |  | 14 |  |  |  | (6 | )
Interest income |  |  | (39 | ) |  |  | (21 | )
Amortization of loan discount |  |  | 2 |  |  |  | - |
Changes in assets and liabilities items: |  |  |  |  |  |  |  |
Decrease in accounts receivable |  |  | 4,355 |  |  |  | 5,386 |
Decrease in other current assets |  |  | 148 |  |  |  | 151 |
Decrease in operating lease right-of-use asset |  |  | 23 |  |  |  | 22 |
Decrease in severance pay, net |  |  | - |  |  |  | (3 | )
Decrease in accounts payable |  |  | (3,952 | ) |  |  | (5,726 | )
Increase (decrease) in other payables |  |  | 85 |  |  |  | (122 | )
Decrease in operating lease liabilities |  |  | (25 | ) |  |  | (30 | )
Net cash provided by operating activities |  |  | 107 |  |  |  | 12 |

The accompanying notes are an integral part of these Interim Condensed Consolidated financial statements.

-8-

VIEWBIX INC.

INTERIM CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) (Cont.)

U.S. dollars in thousands (except share data)

|  | For the three months ended March 31, |
|  | 2024 |  |  | 2023 |
Cash flows from Investing Activities |  |  |  |  |  |  |  |
Purchase of property and equipment |  |  | - |  |  |  | (2 | )
Net cash used in investing activities |  |  | - |  |  |  | (2 | )
Cash flows from Financing Activities |  |  |  |  |  |  |  |
Cash paid to non-controlling interests (see note 1.C) |  |  | - |  |  |  | (2,625 | )
Receipt of short-term bank loan |  |  | 100 |  |  |  | - |
Repayment of short-term loans |  |  | (743 | ) |  |  | (247 | )
Receipt of long-term bank loan |  |  | - |  |  |  | 1,500 |
Repayment of long-term bank loans |  |  | - |  |  |  | (417 | )
Payment of dividend to non-controlling interests |  |  | - |  |  |  | (445 | )
Payment of dividend to shareholders |  |  | - |  |  |  | (130 | )
Increase in loan to parent company |  |  | (17 | ) |  |  | (72 | )
Net cash used in financing activities |  |  | (660 | ) |  |  | (2,436 | )
Decrease in cash and cash equivalents and restricted cash |  |  | (553 | ) |  |  | (2,426 | )
Cash and cash equivalents and restricted cash at beginning of period |  |  | 1,923 |  |  |  | 4,381 |
Cash and cash equivalents and restricted cash at end of period |  |  | 1,370 |  |  |  | 1,955 |
Supplemental Disclosure of Cash Flow Activities: |  |  |  |  |  |  |  |
Cash paid during the period |  |  |  |  |  |  |  |
Taxes paid |  |  | 54 |  |  |  | 185 |
Interest paid |  |  | 205 |  |  |  | 197 |
Total Cash paid during the period |  |  | 259 |  |  |  | 382 |

The accompanying notes are an integral part of these Interim Condensed Consolidated financial statements.

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VIEWBIX INC.

NOTES TO INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

U.S. dollars in thousands (except share data)

NOTE 1: GENERAL

A. Organizational Background

Viewbix Inc. (formerly known as Virtual Crypto Technologies, Inc.) (the “Company”) was incorporated in the State of Delaware on August 16, 1985, under a predecessor name, The InFerGene Company (“InFerGene Company”). On August 25, 1995, a wholly owned subsidiary of InFerGene Company merged with Zaxis International, Inc., an Ohio corporation, which following such merger, the surviving entity, InFerGene Company, changed its name to Zaxis International, Inc (“Zaxis”). In 2015 the Company changed its name to Emerald Medical Applications Corp., subsequent to which the Company, through its subsidiarity, was engaged in the development of technology for use in detection of skin cancer. On January 29, 2018, the Company ceased its business operations in this field.

On January 17, 2018, the Company formed a new wholly owned subsidiary under the laws of the State of Israel, Virtual Crypto Technologies Ltd. (“VCT Israel”), to develop and market software and hardware products facilitating and supporting the purchase and/or sale of cryptocurrencies. Effective as of March 7, 2018, the Company’s name was changed from Emerald Medical Applications Corp. to Virtual Crypto Technologies, Inc. VCT Israel ceased its business operation in 2019 and prior to consummation of the Recapitalization Transaction. On January 27, 2020, VCT Israel was sold to a third party for NIS 50 thousand (approximately $13).

On February 7, 2019, the Company entered into a share exchange agreement (the “Share Exchange Agreement” or the “Recapitalization Transaction”) with Gix Internet Ltd., a company organized under the laws of the State of Israel (“Gix” or “Parent Company’’), pursuant to which, Gix assigned, transferred and delivered its 99.83% holdings in Viewbix Ltd., a company organized under the laws of the State of Israel (“Viewbix Israel”), to the Company in exchange for shares of the Company, which resulted in Viewbix Israel becoming a subsidiary of the Company. In connection with the Share Exchange Agreement, effective as of August 7, 2019, the Company’s name was changed from Virtual Crypto Technologies, Inc. to Viewbix Inc.

B. Reorganization Transaction

On December 5, 2021, the Company entered into a certain Agreement and Plan of Merger with Gix Media Ltd. (“Gix Media”), an Israeli company and the majority-owned (77.92%) subsidiary of Gix, the Parent Company and Vmedia Merger Sub Ltd., an Israeli company and wholly-owned subsidiary of the Company (“Merger Sub”), pursuant to which, Merger Sub merged with and into Gix Media, with Gix Media being the surviving entity and a wholly-owned subsidiary of the Company (the “Reorganization Transaction”).

On September 19, 2022, (the “Closing Date”) the Reorganization Transaction was consummated and as a result, all outstanding ordinary shares of Gix Media, having no par value (the “Gix Media Shares”) were delivered to the Company in exchange for the Company’s shares of common stock, par value $0.0001 per share (“Common Stock”). As a result of the Reorganization Transaction, the former holders of Gix Media Shares, who previously held approximately 68% of the Company’s Common Stock, hold approximately 97% of the Company’s Common Stock, and Gix Media became a wholly owned subsidiary of the Company.

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VIEWBIX INC.

NOTES TO INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

U.S. dollars in thousands (except share data)

NOTE 1: GENERAL (Cont.)

B. Reorganization Transaction (Cont.)

In connection with the Closing of the Reorganization Transaction, the Company filed an Amended and Restated Certificate of Incorporation (the “Amended COI”) with the Secretary of State of Delaware, effective as of August 31, 2022, pursuant to which, concurrently with the effectiveness of the Amended COI, the Company, among other things, effected a reverse stock split of its Common Stock at a ratio of 1-for-28.

As the Company and Gix Media Ltd. were consolidated both by the Parent Company and Medigus Ltd. (the “Ultimate Parent”), before and after the Reorganization Transaction, the Reorganization Transaction was accounted for as a transaction between entities under common control. Accordingly, the financial information of the Company and Gix Media Ltd. is presented in these financial statements, for all periods presented, reflecting the historical cost of the Company and Gix Media Ltd., as it is reflected in the consolidated financial statements of the Parent Company, for all periods preceding March 1, 2022, the date the Ultimate Parent obtained a controlling interest in the Parent Company and as it is reflected in the consolidated financial statements of the Ultimate Parent for all periods subsequent to March 1, 2022.

C. Business Overview

The Company and its subsidiaries (the “Group”), Gix Media and Cortex Media Group Ltd. (“Cortex”), operate in the field of digital advertising. The Group has two main activities that are reported as separate operating segments: the search segment and the digital content segment.

The search segment develops a variety of technological software solutions, which perform automation, optimization, and monetization of internet campaigns, for the purposes of obtaining and routing internet user traffic to its customers. The search segment activity is conducted by Gix Media.

The digital content segment is engaged in the creation and editing of content, in different languages, for different target audiences, for the purposes of generating revenues from leading advertising platforms, including Google, Facebook, Yahoo and Apple, by utilizing such content to obtain and route internet user traffic for its customers. The digital content segment activity is conducted by Cortex.

On January 23, 2023, Gix Media acquired an additional 10% of the share capital of Cortex, increasing its holdings to 80% in consideration for $2,625 (the “Subsequent Purchase”). The Subsequent Purchase was financed by Gix Media’s existing cash balances and by a long-term bank loan received on January 17, 2023, in the amount of $1,500 (see also note 6.B).

The Subsequent Purchase was recorded as a transaction with non-controlling interests in the Company’s statement of changes in shareholders equity for the three months ended March 31, 2023.

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VIEWBIX INC.

NOTES TO INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

U.S. dollars in thousands (except share data)

NOTE 1: GENERAL (Cont.)

D. Impact of the “Iron Swords” War on Israel

On October 7, 2023, following the brutal attacks on Israel by Hamas, a terrorist organization located in the Gaza Strip that infiltrated Israel’s southern border and conducted a series of attacks on civilian and military targets, Israel’s security cabinet declared war (the “War”). Following the commencement of the War, hostilities also intensified between Israel and Hezbollah, a terrorist organization located in Lebanon. This may escalate in the future into a greater regional conflict. The War led to a reduction of business activities in Israel, evacuation of residences located in the northern and southern borders of Israel, a significant call up of military reserves and lower availability of work force.

The Group’s activities are not directly affected by the War, as its customers are predominantly from the US or Europe, markets that were not influenced by the War. However, as a result of the War, the Group’s operations were affected due to the recruitment of some of the Group’s senior employees to reserves, including the CEO of Gix Media. The absence of senior employees for an extended period affected customer relationship and operational and functional continuity and delayed some of the Company’s plans for the fourth quarter of 2023. These effects indirectly contributed to a decline in the Company’s revenues, profitability, and cash flow.

The Company has hired skilled employees to replace those who were recruited to military reserves. however, there is no assurance that future developments of the War will not have any impact for reasons beyond the Company’s control such as expansion of the War to additional regions and the recruitment of more senior employees. The Company has business continuity procedures in place, and will continue to follow developments, assessing potential impact, if any, on the Company’s business, financials and operations.

E. Going Concern

The Company experienced a decrease in its revenues from the digital content and search segments as a result of a decrease in user traffic acquired from third party advertising platforms, an industry-wide decrease in advertising budget, changes and updates to internet browsers’ technology and other changes in the online advertising industry during the second half of 2023 and the three months ended March 31, 2024. As a result of the foregoing, during the three months ended March 31, 2024, the Company recorded an operating loss of $1,011 compared to an operating loss of $76 in the same period last year. Additionally, the Company recorded a net loss of $1,175 compared to $345 in the same period last year. As of March 31, 2024, the Company had cash and cash equivalents of $1,284, bank loans of $8,427 and accumulated deficit of $11,660. Additionally, subsequent to the balance sheet date, a significant customer notified Cortex it will stop advertising on Cortex’s websites (see also note 10).

While subsequent to the balance sheet date Cortex has successfully taken steps to implement certain adjustments to its business model in response to such conditions, the decline in revenues and other circumstances described above raise substantial doubts about the Company’s ability to continue as a going concern during the 12-month period following the issuance date of these financial statements.

Management’s plans in response to these conditions include reducing operating expenses, creating new income sources, seeking additional liquidity opportunities to ensure the Company’s continued operations and raising funds through issuance of debt or equity from various potential investors. However, there is significant uncertainty as to whether the Company will succeed in implementing its plans, or be able to secure sufficient funds when needed.

These financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern.

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VIEWBIX INC.

NOTES TO INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

U.S. dollars in thousands (except share data)

NOTE 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

A. Unaudited Interim Financial Statements

The accompanying unaudited interim condensed financial statements have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) for interim financial information and with the instructions to Form 10-Q and Article 10 of U.S. Securities and Exchange Commission Regulation S-X. Accordingly, they do not include all the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of management, all adjustments considered necessary for a fair presentation have been included (consisting only of normal recurring adjustments except as otherwise discussed). For further information, reference is made to the consolidated financial statements and footnotes thereto included in the Group’s Annual Report on Form 10-K for the year ended December 31, 2023.

B. Principles of Consolidation

The accompanying condensed consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries. All intercompany balances and transactions have been eliminated in consolidation.

C. Use of estimates

The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenue and expenses during the reporting period. The Company evaluates on an ongoing basis its assumptions, including those related to contingencies, deferred taxes, inventory impairment, stock-based compensation, as well as in estimates used in applying the revenue recognition policy. Actual results may differ from those estimates.

D. Significant Accounting Policies

The significant accounting policies followed in the preparation of these unaudited interim condensed consolidated financial statements are identical to those applied in the preparation of the latest annual financial statements.

E. Recent Accounting Pronouncements

Management does not believe that any recently issued, but not yet effective, accounting standards, if currently adopted, would have a material effect on the Group’s interim condensed consolidated financial statements.

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VIEWBIX INC.

NOTES TO INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited

U.S. dollars in thousands (except share data)

NOTE 3: LOAN TO PARENT COMPANY

SCHEDULE OF LOAN FROM TO PARENT COMPANY

|  | As of March 31 2024 |  |  | As of December 31 2023 |
Loan to Parent Company |  | $ | 3,808 |  |  | $ | 3,752 |

The balance with the Parent Company represents a balance of an intercompany loan under a loan agreement signed between Gix Media and the Parent Company on March 22, 2020. The loan bears interest at a rate to be determined from time to time in accordance with Section 3(j) of the Income Tax Ordinance, new version, and the Income Tax Regulations (Determination of Interest Rate for the purposes of Section 3(j), 1986) or according to a market interest rate decision as agreed between the parties. The amount of the loan is in U.S. dollars. On March 20, 2024, the Company’s board of directors approved to extend the loan between Gix Media and the Parent Company by 6 months until July 1, 2024. All other terms and conditions of the loan remained unchanged.

For the three months ended March 31, 2024 and 2023, Gix Media recognized interest income in the amount of $39 and $21, respectively.

NOTE 4: LEASES

On February 25, 2021, Gix Media entered into a lease agreement for a new corporate office of 479 square meters in Ramat Gan, Israel, at a monthly rent fee of $10. The lease period is for 36 months (the “initial lease period”) with an option by the Company to extend the lease period for two additional terms of 24 months each. In accordance with the lease agreement, the Company made leasehold improvements in exchange for a rent fee discount of $67 which will be spread over the initial lease period.

The Company includes renewal options that it is reasonably certain to exercise in the measurement of the lease liabilities. In December 2023, the Company exercised the option to extend the lease period for an additional term of 24 months (from March 1, 2024, to February 28, 2026).

Weighted-average remaining lease term and discount rate were as follows:

SCHEDULE OF WEIGHTED AVERAGE REMAINING LEASE TERMS AND DISCOUNT RATES

|  | As of March 31 2024 |
Operating leases weighted average remaining lease term (in years) |  |  | 3.92 |
Operating leases weighted average discount rate |  |  | 3.10 | %

|  | As of December 31 2023 |
Operating leases weighted average remaining lease term (in years) |  |  | 4.17 |
Operating leases weighted average discount rate |  |  | 3.10 | %

Operating lease expenses amounted to $28 and $26 for the three months ended March 31, 2024 and 2023, respectively.

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VIEWBIX INC.

NOTES TO INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited

U.S. dollars in thousands (except share data)

NOTE 5: GOODWILL AND INTANGIBLE ASSETS, NET

| A. | Composition:

SCHEDULE OF GOODWILL AND INTANGIBLE ASSETS

|  | Internal-use Software |  |  | Customer Relations |  |  | Technology |  |  | Goodwill |  |  | Total |
Cost: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Balance as of January 1, 2024 |  |  | 465 |  |  |  | 6,234 |  |  |  | 11,008 |  |  |  | 12,254 |  |  |  | 29,961 |
Additions |  |  | - |  |  |  | - |  |  |  | - |  |  |  |  |  |  |  |  |
Balance as of March 31, 2024 |  |  | 465 |  |  |  | 6,234 |  |  |  | 11,008 |  |  |  | 12,254 |  |  |  | 29,961 |
Accumulated amortization: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Balance as of January 1, 2024 |  |  | 276 |  |  |  | 1,631 |  |  |  | 3,366 |  |  |  | - |  |  |  | 5,273 |
Amortization recognized during the period |  |  | 38 |  |  |  | 222 |  |  |  | 459 |  |  |  | - |  |  |  | 719 |
Balance as of March 31, 2024 |  |  | 314 |  |  |  | 1,853 |  |  |  | 3,825 |  |  |  | - |  |  |  | 5,992 |
Amortized cost: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
As of March 31, 2024 |  |  | 151 |  |  |  | 4,381 |  |  |  | 7,183 |  |  |  | 12,254 |  |  |  | 23,969 |

|  | Internal-use Software |  |  | Customer Relations |  |  | Technology |  |  | Goodwill (*) |  |  | Total |
Cost: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Balance as of January 1, 2023 |  |  | 465 |  |  |  | 6,234 |  |  |  | 11,008 |  |  |  | 17,361 |  |  |  | 35,068 |
Additions |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |
Impairment of goodwill |  |  | - |  |  |  | - |  |  |  | - |  |  |  | (5,107 | ) |  |  | (5,107 | )
Balance as of December 31, 2023 |  |  | 465 |  |  |  | 6,234 |  |  |  | 11,008 |  |  |  | 12,254 |  |  |  | 29,961 |
Accumulated amortization: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Balance as of January 1, 2023 |  |  | 122 |  |  |  | 741 |  |  |  | 1,531 |  |  |  | - |  |  |  | 2,394 |
Amortization recognized during the year |  |  | 154 |  |  |  | 890 |  |  |  | 1,835 |  |  |  | - |  |  |  | 2,879 |
Balance as of December 31, 2023 |  |  | 276 |  |  |  | 1,631 |  |  |  | 3,366 |  |  |  | - |  |  |  | 5,273 |
Amortized cost: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
As of December 31, 2023 |  |  | 189 |  |  |  | 4,603 |  |  |  | 7,642 |  |  |  | 12,254 |  |  |  | 24,688 |

(*) | As of December 31, 2023, the Company recognized indicators of impairment of the digital content reporting unit. As a result, the Company performed an impairment test which included a quantitative analysis of the fair value of the reporting unit and compared the fair value of the reporting unit to its carrying amount. As the carrying amount exceeded the fair value, the Company recognized an impairment loss of $5,107. The assessment of impairment loss was not impacted by subsequent events that occurred in April 2024 (see note 10), which may result in an additional goodwill impairment loss during the second quarter of 2024.

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VIEWBIX INC.

NOTES TO INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited

U.S. dollars in thousands (except share data)

NOTE 6: LOANS

| A. | Composition of long-term and short-term loans of the Group:

SCHEDULE OF COMPOSITION OF BALANCE OF GROUP’S LOANS

|  | Interest rate |  |  | As of March 31, 2024 |  |  | As of December 31, 2023 |
Short-term bank loan – Gix Media |  |  | SOFR + 4.08 | % |  |  | 3,057 |  |  |  | 3,500 |
Short-term bank loan – Cortex |  |  | SOFR + 3.93 | % |  |  | 1,300 |  |  |  | 1,500 |
Short-term bank loan |  |  | SOFR + 3.93 | % |  |  | 1,300 |  |  |  | 1,500 |
Long-term bank loan, including current maturity – Gix Media (received on October 13, 2021) |  |  | SOFR + 4.12 | % |  |  | 2,963 |  |  |  | 2,963 |
Long-term bank loan, including current maturity – Gix Media (received on January 17, 2023) |  |  | SOFR + 5.37 | % |  |  | 1,107 |  |  |  | 1,107 |
Long-term loan – Viewbix Israel |  |  | 9 | % |  |  | 436 |  |  |  | 434 |
Long-term loan |  |  | 9 | % |  |  | 436 |  |  |  | 434 |
Bank Loan |  |  |  |  |  |  | 8,863 |  |  |  | 9,504 |

| B. | Bank Financing for Cortex’s capital shares additional Purchase:

On January 23, 2023, Gix Media acquired an additional 10% of Cortex’s capital shares which was financed by Gix Media’s existing cash balances and by a long-term bank loan received on January 17, 2023, in the amount of $1,500 to be repaid in 42 monthly payments at an annual interest rate of SOFR + 5.37%.

| C. | Cortex’s Loan Agreement:

On September 21, 2022, Cortex and Leumi entered into an addendum to an existing loan agreement between the parties, dated August 15, 2020 (“Cortex Loan Agreement”). As part of the addendum to the Cortex Loan Agreement, Leumi provided Cortex with a monthly renewable credit line of $1,500 (the “Cortex Credit Line”). The Cortex Credit Line is determined every month at the level of 70% of Cortex’s customers’ balance. The amounts that are drawn from the Cortex Credit Line bear an annual interest of SOFR + 3.52%.

On April 27, 2023, Leumi increased the Cortex Credit Line by $1,000. In September 2023, Cortex and Leumi entered into an additional addendum to the Cortex Loan Agreement, in which Leumi extended the Cortex Credit Line of $2,500 by one year which will expire on September 20, 2024. The amounts that are drawn from the Cortex Credit Line bear an annual interest of SOFR + 4.08%.

As of March 31, 2024, Cortex has drawn $1,300 of the Cortex Credit Line.

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VIEWBIX INC.

NOTES TO INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited

U.S. dollars in thousands (except share data)

NOTE 6: LOANS (Cont.)

| D. | Long term loan and issuance of warrants:

On November 15, 2023, Viewbix Israel entered into a Loan Agreement (the “2023 Loan”) with certain lenders (the “Lenders”) whereby the Lenders provided Viewbix Israel with loans in the aggregate amount of $480, of which, $200 was provided by the Ultimate Parent. In accordance with the terms of the 2023 Loan, the principal amount bears an annual interest at a rate of 9% and will be repaid over the course of two years following January 1, 2024 (the “Repayment Period”). During the Repayment Period, for the first 12 months, Viewbix Israel will repay the interest on a quarterly basis and for the remaining 12 months, Viewbix Israel will repay the principal amount on a quarterly basis (in 4 equal payments) along with the interest. If Viewbix Israel fails to repay all or part of the 2023 Loan amount, the Lenders have the option to convert the outstanding 2023 Loan amount into shares of Common Stock of the Company.

In connection with the 2023 Loan, the Company issued to each lender a warrant to purchase shares of Common Stock (the “2023 Warrants”). The 2023 Warrants are exercisable to 480,000 shares, at an exercise price of $0.50 per share and will expire and cease to be exercisable on December 31, 2025. The Company recorded the 2023 Warrants as an equity instrument.

The Company allocated the total amount of $480 in respect of the warrants issued and the 2023 Loan extended based on their relative fair values. As a result of the allocation, a discount of $55 was attributed as the fair value of the 2023 Warrants. The discount is amortized over the term of the Loan as finance expense.

The allocation of the total proceeds of $480 to the liability and equity components was as follows:

SCHEDULE OF FAIR VALUE DISTRIBUTION OF LIABILITY AND EQUITY COMPONENTS

Instrument |  | Fair Value |  |  | % of Fair Value |  |  | Allocated Amount |
Loan |  |  | 428 |  |  |  | 88.63 |  |  |  | 425 |
Warrants |  |  | 55 |  |  |  | 11.37 |  |  |  | 55 |
Total |  |  | 483 |  |  |  | 100.00 |  |  |  | 480 |

The composition of long-term loan balance as of the transaction is as follows:

SCHEDULE OF COMPOSITION OF LONG TERM LOAN

Loan |  |  | 480 |
Discount |  |  | (55 | )
Long term loan, net |  |  | 425 |

For the three months ended March 31, 2024, the Company recorded amortization expenses of $2 as financial expenses in the consolidated statements of operations.

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VIEWBIX INC.

NOTES TO INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited

U.S. dollars in thousands (except share data)

NOTE 7: COMMITMENTS AND CONTINGENCIES

Liens:

On September 19, 2022, as part of the Reorganization Transaction terms, the Company has provided several liens under Gix Media’s Financing Agreement with Leumi in connection with the Cortex Transaction, as follows: (1) a guarantee to Bank Leumi of all of Gix Media’s obligations and undertakings to Bank Leumi unlimited in amount; (2) a subordination letter signed by the company to Leumi Bank; (3) A first ranking all asset charge over all of the assets of the Company; and (4) a Deposit Account Control Agreement over the Company’s bank accounts.

Gix Media has provided several liens under the Financing Agreement with Leumi in connection with the Cortex Transaction, as follows: (1) a floating lien on Gix Media’s assets; (2) a lien on Gix Media’s bank account in Leumi; (3) a lien on Gix Media’s rights under the Cortex Transaction; (4) a fixed lien on Gix Media’s intellectual property; and (5) a lien on Gix Media’s full holdings in Cortex.

Gix Media restricted deposits in the amount of $52 as of March 31, 2024, are used as a security in respect of credit cards, bank guaranties, office lease agreement and hedge transactions on the USD exchange rate. Cortex has a restricted deposit in the amount of $34 as of March 31, 2024, is used as a security in respect of its leased offices.

NOTE 8: SHAREHOLDERS’ EQUITY

A. Shares of Common Stock:

Shares of Common Stock confer the rights to: (i) participate in the general meetings, to one vote per share for any purpose, to an equal part, on share basis, (ii) in distribution of dividends and (iii) to equally participate, on share basis, in distribution of excess of assets and funds from the Company and will not confer other privileges.

On May 18, 2023, the Company’s Board of Directors (the “Board”) approved to issue and grant 111,111 shares of restricted Common Stock (“Equity Grant”) to one of the Company’s directors (the “Director”). The Equity Grant was granted for consulting services provided to the Company by the Director, specifically in connection with securing favorable terms for a bank financing. The Company recorded a share-based compensation expense of $34 in general and administrative expenses in connection to the Equity Grant.

B. Warrants:

The following table summarizes information of outstanding warrants as of March 31, 2024:

SCHEDULE OF OUTSTANDING WARRANTS

|  | Warrants |  |  | Warrant Term |  | Exercise Price |  |  | Exercisable |
Class J Warrants |  |  | 130,333 |  |  | July 2029 |  |  | 13.44 |  |  |  | 130,333 |
Class K Warrants |  |  | 130,333 |  |  | July 2029 |  |  | 22.40 |  |  |  | 130,333 |
2023 Warrants (see note 6.D) |  |  | 480,000 |  |  | December 2025 |  |  | 0.50 |  |  |  | 480,000 |

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VIEWBIX INC.

NOTES TO INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited

U.S. dollars in thousands (except share data)

NOTE 8: SHAREHOLDERS’ EQUITY (Cont.)

C. Share option plan

In 2017, after the completion of Gix Media’s acquisition by the Parent Company, the Parent Company granted options to Gix Media’s employees. These options entitle the employees to purchase ordinary shares of the Parent Company that are traded on Tel-Aviv Stock Exchange.

On March 2, 2023, the Board approved the adoption of the 2023 Stock Incentive Plan (the “2023 Plan”). The 2023 Plan permits the issuance of up to (i) 2,500,000 shares of Common Stock, plus (ii) an annual increase equal to the lesser of (A) 5% of the Company’s outstanding capital stock on the last day of the immediately preceding calendar year; and (B) such smaller amount as determined by the Board, provided that no more than 2,500,000 shares of Common Stock may be issued upon the exercise of Incentive Stock Options. If any outstanding awards expire, are canceled or are forfeited, the underlying shares would be available for future grants under the 2023 Plan. As of the date of approval of the financial statements, the Company had reserved 2,500,000 shares of Common Stock for issuance under the 2023 Plan.

The 2023 Plan provides for the grant of stock options, restricted stock, restricted stock units, stock or other stock-based awards, under various tax regimes, including, without limitation, in compliance with Section 102 and Section 3(i) of the Israeli Income Tax Ordinance (New Version) 5271-1961, and for awards granted to United States employees or service providers, including those who are deemed to be residents of the United States for tax purposes, Section 422 and Section 409A of the United States Internal Revenue Code of 1986.

In connection with the adoption of the 2023 Plan, on March 7, 2023, the Company entered into certain intercompany reimbursement agreements with two of its subsidiaries, Viewbix Israel and Gix Media (the “Recharge Agreements”). The Recharge Agreements provide for the offer of awards under the 2023 Plan to employees or service providers of Viewbix Israel and Gix Media (the “Affiliates”) under the 2023 Plan. Under the Recharge Agreements, the Affiliates will each bear the costs of awards granted to its employees or its service providers under the 2023 Plan and will reimburse the Company upon the issuance of shares of Common Stock pursuant to an award, for the costs of shares issued, but in any event not prior to the vesting of an award. The reimbursement amount will be equal to the lower of (a) the book expense for such award as recorded on the financial statements of one of the respective Affiliates, determined and calculated according to U.S. GAAP, or any other financial reporting standard that may be applicable in the future, or (b) the fair value of the shares of Common Stock at the time of exercise of an option or at the time of vesting of an RSU, as applicable.

On July 20, 2023, the Company granted 51,020 restricted share units (the “RSUs”) under the 2023 Plan to Gix Media’s CEO, as part of his employment terms, (the “Grantee”) under the following terms and conditions: (1) 51,020 of Common Stock underlying the grant of RSUs (2) Vesting Commencement Date: July 1, 2023 (3) vesting schedule: 50% of the RSUs will vest immediately upon the Vesting Commencement Date (the “First Tranche”) and the remaining 50% of the RSUs will vest 12 months after the Vesting Commencement Date, provided, in each case, that the Grantee remains continuously as a Service Provider (as defined under the 2023 Plan) of Gix Media or its affiliates throughout each such vesting date (the “Grant”).

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VIEWBIX INC.

NOTES TO INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited

U.S. dollars in thousands (except share data)

NOTE 8: SHAREHOLDERS’ EQUITY (Cont.)

C. Share option plan (Cont.)

In July 2023, following the Grant and upon the vesting of the First Tranche, the Company issued 25,510 shares of Common Stock to the Grantee. The Company recorded a share-based compensation expense of $25 in general and administrative expenses with connection to the issuance of shares upon the vesting of the First Tranche.

D. Dividends:

On September 14, 2022, Gix Media declared a dividend to its shareholders prior to the consummation of the Reorganization Transaction in the amount of $1,000, of which an amount of $83 was paid as tax to the Israeli Tax Authority. During 2022 Gix Media distributed an amount of $787 out of the remaining amount of $917, which an amount of $714 that was distributed to the Parent Company, was offset from the loan to Parent Company. The remaining amount of $130 was distributed by Gix Media in January 2023.

On December 25, 2022, Cortex declared a dividend in the total amount of $445 to the non-controlling interests. The amount was distributed by Cortex to non-controlling interests in two payments of $219 and $226 in February and March 2023, respectively.

No dividends were distributed during the three-month period ending March 31, 2024.

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VIEWBIX INC.

NOTES TO INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited

U.S. dollars in thousands (except share data)

NOTE 9: SEGMENT REPORTING

The Group operates in two different segments in such a way that each company in the Group operates as a separate business segment.

Search segment- the search segment develops a variety of technological software solutions, which perform automation, optimization and monetization of internet campaigns, for the purposes of obtaining and routing internet user traffic to its customers.

Digital content segment- the digital content segment is engaged in the creation and editing of content, in different languages, for different target audiences, for the purposes of generating revenues from leading advertising platforms, including Google, Facebook, Yahoo and Apple, by utilizing such content to obtain internet user traffic for its customers.

The segments’ results include items that directly serve and/or are used by the segment’s business activity and are directly allocated to the segment. As such they do not include depreciation and amortization expenses for intangible assets created at the time of the purchase of those companies, financing expenses created for loans taken for the purpose of purchasing those companies and therefore these items are not allocated to the various segments.

Segments’ assets and liabilities are not reviewed by the Group’s chief operating decision maker and therefore were not reflected in the segment reporting.

Segments revenues and operating results:

SCHEDULE OF SEGMENTS REVENUES AND OPERATING RESULTS

|  | Search segment |  |  | Digital content segment |  |  | Adjustments (See below) |  |  | For the three months ended March 31, 2024 |
Revenues from external customers |  |  | 2,472 |  |  |  | 7,530 |  |  |  | - |  |  |  | 10,002 |
Depreciation and amortization |  |  | - |  |  |  | - |  |  |  | 734 |  |  |  | 734 |
Segment operating income (loss) |  |  | 462 |  |  |  | (385 | ) |  |  | (1,088 | ) |  |  | (1,011 | )
Financial (expenses) income, net |  |  | 1 |  |  |  | (14 | ) |  |  | (150 | )(*) |  |  | (163 | )
Segment Income (loss), before income taxes |  |  | 463 |  |  |  | (399 | ) |  |  | (1,238 | ) |  |  | (1,174 | )

|  | Search segment |  |  | Digital content segment |  |  | Adjustments (See below) |  |  | For the three months ended March 31, 2023 |
Revenues from external customers |  |  | 5,110 |  |  |  | 15,752 |  |  |  | - |  |  |  | 20,862 |
Depreciation and amortization |  |  | - |  |  |  | - |  |  |  | 734 |  |  |  | 734 |
Segment operating income (loss) |  |  | 231 |  |  |  | 796 |  |  |  | (1,103 | ) |  |  | (76 | )
Financial (expenses) income, net |  |  | (74 | ) |  |  | 37 |  |  |  | (148 | )(*) |  |  | (185 | )
Segment Income (loss), before income taxes |  |  | 157 |  |  |  | 833 |  |  |  | (1,251 | ) |  |  | (261 | )

(*) | Mainly consist of financial expenses from the Financing Agreement of bank loans taken for business combinations (see note 6).

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VIEWBIX INC.

NOTES TO INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited

U.S. dollars in thousands (except share data)

NOTE 9: SEGMENT REPORTING (Cont.)

The “adjustment” column for segment operating income includes unallocated selling, general, and administrative expenses and certain items which management excludes from segment results when evaluating segment performance, as follows:

SCHEDULE OF RECONCILIATION BETWEEN SEGMENTS OPERATING RESULTS

|  | For the three months ended March 31, 2024 |
Depreciation and amortization expenses not attributable to segments (**) |  | $ | (734 | )
General and administrative not attributable to the segments (***) |  | $ | (354 | )
|  | $ | (1,088 | )

|  | For the three months ended March 31, 2023 |
Depreciation and amortization expenses not attributable to segments (**) |  | $ | (734 | )
General and administrative not attributable to the segments (***) |  | $ | (369 | )
|  | $ | (1,103 | )

| (*) | Mainly consist of financial expenses from the Financing Agreement of bank loans taken for business combinations (see note 6).

| (**) | Mainly consist of technology and customer relations amortization costs from business combinations.
| (***) | Mainly consist of salary and related expenses and professional consulting expenses.

NOTE 10: SUBSEQUENT EVENTS

In April 2024, the Company was informed by Cortex that a significant customer of Cortex recently notified Cortex it will stop advertising on Cortex’s sites, as part of its policy decision to cease advertising on Made for Advertising (“MFA”) sites (the “Cortex Adverse Effect”). The Cortex Adverse Effect, which has materially affected Cortex’s business and operations, has occurred following certain recent developments relating to publishers that are categorized by a number of on-line advertisers as MFA, including decisions made by leading media on-line advertisers to prioritize different media categories and implement publishing restrictions in connection with MFA.

Following the Cortex Adverse Effect, the Company and the bank in which Cortex’s and Gix Media’s accounts, credit facilities, and loans are maintained approved on May 20, 2024 a debt restructuring program pursuant to which, inter alia, the credit lines to Cortex were increased to 80% of the balance of Cortex’s customers (up to a limit of $2 million), as opposed to the 70% limitation imposed prior to the restructuring program, Gix Media’s monthly revolving credit lines were increased by an additional $300 thousand, the Company committed to perform cost-cutting measures, including a reduction in head count, the Company will raise up to $1.25 million by means of issuance of equity or debt, the covenants under the original loan agreements as of March 31, 2024 were waived and a new covenant, measured by reference to EBTIDA, was implemented, and a grace in relation to a portion of the monthly loan repayments was given. The debt restructuring program will be in effect until August 2024, after which it will be renegotiated between the Company and the bank.

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ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS AND RESULTS OF OPERATIONS

Special Note Regarding Forward-Looking Statements

The following management’s discussion and analysis section should be read in conjunction with the Company’s unaudited financial statements as of March 31, 2024 and 2023, and the related statements of statement operation, statement of changes in shareholders’ equity and statements of cash flows for the nine and three months then ended, and the related notes thereto contained in this Quarterly Report on Form 10-Q (this “Quarterly Report”).

Forward-Looking Statements

This management discussion and analysis section contains forward-looking statements, such as statements of the Company’s plans, objectives, expectations, and intentions. Any statements that are not statements of historical fact are forward-looking statements. When used, the words “believe,” “plan,” “intend,” “anticipate,” “target,” “estimate,” “expect” and the like, and/or future tense or conditional constructions “will,” “may,” “could,” “should,” etc., or similar expressions, identify certain of these forward-looking statements. These forward-looking statements are subject to risks and uncertainties that could cause actual results or events to differ materially from those expressed or implied by the forward-looking statements. Forward-looking statements are based on information we have when those statements are made or our management’s good faith belief as of that time with respect to future events and are subject to risks and uncertainties that could cause actual performance or results to differ materially from those expressed in or suggested by the forward-looking statements. Important factors that could cause such differences include, but are not limited to:

● | the continued demand of digital advertising as an integral part of corporate marketing and internal communications plans and the continued growth and acceptance of digital advertising as effective alternatives to traditional offline marketing products and service;
● | our ability to retain and attract a programmatic advertiser, and the associated payments received from such programmatic advertisers’ ads on websites which have been categorized as “Made for Advertising”;
● | our ability to generate enough cash flow to meet our debt obligations or fund our other liquidity needs, and substantial doubt regarding our ability to continue as a going concern;
● | our need to raise additional capital to meet our business requirements in the future and such capital raising may be costly or difficult to obtain and could dilute out shareholders’ ownership interests;
● | our ability to receive credit facility to fund our operations, at favorable terms, or at all;
● | our ability to pay our obligations when they become due, including the contemplated debt restructuring program currently under negotiation with our credit and debtholders;
● | our subsidiaries’ future performance, including our ability to instill potential measures to assist Cortex and Gix Media in mitigating future economic harm;
● | entry of new competitors and products, the impact of large and established internet and technology companies and potential technological obsolescence of our offered platforms; and
● | political, economic and military conditions in Israel, including the recent attack by Hamas and other terrorist organizations from the Gaza Strip and elsewhere in the region and Israel’s war against them, as well as the war’s potential impact on our business and operation

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The foregoing does not represent an exhaustive list of matters that may be covered by the forward-looking statements contained herein or risk factors that we are faced with which may cause our actual results to differ from those anticipated in our forward-looking statements. For a discussion of these and other risks that relate to our business and investing in our common stock, you should carefully review the risks and uncertainties described in this Quarterly Report on Form 10-Q, and those contained in section captioned “Risk Factors” of our Annual Report on Form 10-K for the fiscal year ended December 31, 2023, filed with the Securities and Exchange Commission (the “SEC”) on March 25, 2024 (the “Annual Report”). The Company’s actual results could differ materially from those contemplated in these forward-looking statements as a result of these factors. The Company does not undertake any obligation to update forward-looking statements to reflect events or circumstances occurring after the date of this Quarterly Report.

Overview and background

Viewbix Inc. (the “Registrant”, “Viewbix” or the “Company”) is a digital advertising platform that develops and markets a variety of technological platforms that automate, optimize and monetize digital online campaigns. Viewbix’s operations were previously focused on analysis of the video marketing performance of its clients as well as the effectiveness of their messaging (“Video Advertising Platform”). With the Video Advertising Platform, Viewbix allowed its clients with digital video properties the ability to use its platforms in a way that allows viewers to engage and interact with the video. The Video Advertising Platform measures when a viewer performs a specific action while watching a video and collects and reports the results to the client. However, due to the Company’s failure to meet predetermined sales targets which were set pursuant to the recapitalization transaction with Gix Internet Ltd., in January 2020, the Company determined to reduce its operations and the size of its sales and R&D team in the Digital Advertising Platform.

The Company, through its subsidiaries Gix Media and Cortex, expanded its digital advertising operations across two additional main sectors: ad search and digital content (the “Search Platform” and the “Content Platform”, respectively”). Gix Media and Cortex develop and market a variety of technological software solutions that automate, optimize and monetize online campaigns. Cortex also creates, edits and markets content in various languages to different target audiences in order to generate revenues from advertisements displayed together with the content, which are posted on digital content, marketing and advertising platforms. These technological tools enable advertisers and website owners to earn more from their advertising campaigns and generate additional profits from their sites.

Through its Search Platform, the Company provides services to leading search engines worldwide (“Search Engines”) by developing, marketing and distributing software products to internet users. The operations and activity on this platform are powered by Gix Media.

Through the Content Platform, the Company provides editing and marketing services of content in different languages and to different target audiences with the goal of generating revenues from advertising employed in such content, which is based on digital content marketing and advertising platforms. The operations and activity on this platform are powered by Cortex.

Search Platform

Gix Media’s Search Platform allows for the referral of user traffic (i.e., searches that are performed by internet users) to Search Engines, such as Yahoo and Bing, where the Search Engines display the ads of their customers. The Search Engines pay Gix Media for the searches that were referred by it, based on the amount of consideration that the Search Engine receives from the advertisers for the user traffic generated, less a certain percentage from the revenues attributed to the Search Engine. Since the customers of Gix Media are the Search Engines, and not the advertisers, Gix Media recognizes revenues for the actual amount received from the Search Engines, and not from the advertisement revenue itself.

The referral of user traffic by Gix Media to the Search Engines is possible after users download Gix Media’s products, which are browser add-ons, usually from the browser stores (mostly Google Chrome browsers) and by downloading desktop software products, free of charge, for the Apple operating system (for Mac computers) and for the Microsoft operating system (for PC computers). When downloading Gix Media’s products, the users grant permission to Gix Media to refer the searches performed while using Gix Media’s products to the Search Engines.

In addition, Gix Media provides user traffic referral services to Search Engines through the referral of traffic of browsers who engage content generated by Gix Media. This content is displayed on ad spaces that are purchased by the Company by content recommendation companies (such as Yahoo!, Outbrain, Taboola and Gemini). When occasional users click on such content, Gix Media transfers user traffic to a Search Engine which contains search words that are related to the advertising content.

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Content Platform

Cortex’s Content Platform produces engaging content and marketing material in various languages to various target audiences, in order to generate revenues from advertisements displayed together with the content, which are posted on digital content, marketing and advertising platforms. Cortex acts as a digital content platform that publishes content written by creative writers and editors which it employs. The content is displayed on several different content websites owned by Cortex, covering various subjects including culture, history, trips, pets, entertainment and leisure, food, etc. (the “Cortex Websites”). Cortex developed capabilities that enable it and its customers to profit from the original content which it publishes by advertising the content on leading international third-party websites and online ad platforms (the “Third Party Platforms”). Readers are exposed to the articles on the Third-Party Platforms and may choose to read them by clicking an ad, after which readers are directed automatically to the Cortex Websites where the content is posted.

The technological tools developed by Cortex allow businesses in the digital advertising market (search engines, ad exchanges, advertisers, content owners and brand owners) to earn more from their advertising campaigns and generate additional profit from their websites, both from its content and from its advertising.

Advertisers display ads on various platforms for potential customers (internet users and readers). In order to help maximize the effectiveness of advertising, Cortex developed different advertising systems and tools for content management, content distribution and campaigns and measurement of performance on the various platforms that display the content.

Recent Developments

Cortex Adverse Effect

In April 2024, the Company was informed by Cortex, that certain recent developments relating to publishers that are categorized by a number of programmatic advertisers as “Made for Advertising” (“MFA”) sites, including decisions made by leading media programmatic advertisers to prioritize different media categories and implement publishing restrictions in connection with MFA, have materially affected Cortex’s business and operations. In connection with the foregoing, a significant customer of Cortex recently notified Cortex that in light of the foregoing changes relating to MFA that customer decided to stop advertising on Cortex’s Websites, which decision Cortex anticipates will significantly and negatively impact its future revenue streams (the “Cortex Adverse Effect”). Upon receipt of this update, the Company’s board of directors convened a meeting to discuss the implications on the Company as well as potential measures to assist Cortex in mitigating any future economic harm to Cortex and the Company, including (inter alia), assisting with reducing operating expenses, helping identify new revenues sources for Cortex, participating in any negotiations with Cortex’s and Gix Media’s bank regarding the terms of its outstanding loans and business plans in an effort to provide additional liquidity and ensure continued compliance with Cortex’s and Gix Media’s obligations towards the bank, and assisting with fundraising prospects in debt or equity capital in order to help enable Cortex’s and Gix Media’s continued business and operations.

Following the Cortex Adverse Effect, the Company updated Cortex’s and Gix Media’s bank, in which Cortex’s and Gix Media’s accounts, credit facilities, and loans rendered by the bank are maintained, and, as a result, the bank determined to limit each company’s respective credit facilities with the bank until a debt restructuring program can be established between the parties. On May 20, 2024, the Company and the bank agreed in principle on a debt restructuring program pursuant to which, inter alia: (i) the credit facility to Cortex was increased to 80% of the balance of Cortex’s customers (up to a limit of $2 million), as opposed to the 70% limitation imposed previously; (ii) Gix Media’s monthly revolving credit facilities were increased by an additional $300 thousand; (iii) the Company committed to perform cost-cutting measures, including a reduction in head count; (iv) the Company committed to pursue a capital raise of up to $1.25 million by means of issuance of equity or debt; (v) the covenants under the original loan agreements as of March 31, 2024 were waived; (vi) a new covenant, measured by reference to EBTIDA, was implemented; and (vii) implemented a grace period in relation to a portion of the monthly loan repayments was given (the “Program”).

The Program will be in effect until August 2024, after which it will be renegotiated between the Company and the bank.

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Reorganization Transaction with Gix Media Ltd.

On December 5, 2021, the Company entered into a certain Agreement and Plan of Merger (the “Reorganization Transaction”) with Gix Media., an Israeli company and the majority-owned subsidiary of Gix Internet, in the field of MarTech (Marketing Technology) solutions, primarily search and content monetization and Vmedia Merger Sub Ltd., an Israeli company and wholly-owned subsidiary of the Company (“Merger Sub”), pursuant to which, following the Reorganization Transaction, and upon satisfaction of additional closing conditions, Merger Sub will merge with and into Gix Media, with Gix Media being the surviving entity and wholly-owned subsidiary of the Company. Prior to the closing of the Reorganization Transaction, Gix Media was a majority-owned subsidiary of Gix Internet, which held approximately 58% of the Common Stock of the Company, on a fully diluted basis.

On September 19, 2022, the Reorganization Transaction, was consummated (the “Closing”) and, as a result, all outstanding ordinary shares of Gix Media, having no par value (the “Gix Media Shares”) were exchanged for shares of the Company’s Common Stock such that Gix Media became a wholly owned subsidiary of the Company. Following the Reorganization Transaction, holders of the Gix Media Shares held 90% of the Company’s Common Stock on a fully diluted basis, with Gix Internet holding 76.67% of the Common Stock on a fully diluted basis.

The following diagram illustrates the associated corporate structure of the Company prior to and following the Reorganization Transaction.

Following the closing of the Reorganization Transaction, the Company began to integrate Gix Media’s technology into its operations aiming to expand its growth potential in the search and content monetization space. Gix Media’s business operations include both (i) the provision of services to the world’s leading search engines through the development, marketing and distribution of free software to many Internet users, and (ii) editing and marketing of content in different languages to different target markets, for the purpose of monetizing advertisements on digital marketing and advertising platforms.

In connection with the Closing, effective as of August 31, 2022, the Company adopted an Amended and Restated Certificate of Incorporation (“Certificate of Incorporation”), pursuant to which the Company, among other things, effected a reverse stock split of its Common Stock at a ratio of 1-for-28 (the “Reverse Split”) and an Amended and Restated Bylaws (“Bylaws”). All descriptions of our capital stock, including share amounts and per share amounts in this Quarterly Report, are presented after giving effect to the Reverse Split.

Acquisition of Cortex Media Group Ltd.

On October 13, 2021, Gix Media acquired 70% (on a fully diluted basis) of the share capital of Cortex (the “Cortex Acquisition”), an Israeli private company operating in the field of online media and advertising. In consideration for the Cortex Acquisition, Gix Media paid NIS 35 million in cash (approximately $11 million), out of which an amount of $0.5 million was deposited in trust for a period of 12 months from the closing date. The Cortex Acquisition also includes the obligation and right of Gix Media to acquire 30% of Cortex’s share capital in three equal tranches, each at the beginning of 2023, 2024 and 2025 (“Remaining Balance Shares”), such that following the acquisition of all of the Remaining Balance Shares, Gix Media will hold 100% of Cortex’s share capital on a fully diluted basis. On January 23, 2023, Gix Media purchased an additional 10% of Cortex’s share capital. In January 2024, Gix Media did not purchase an additional 10% of Cortex’s share capital, as Cortex did not meet certain Key Performance Indicators (KPIs), as conditioned in the definitive agreements of the Cortex Acquisition.

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In connection with the Cortex Acquisition, on October 13, 2021, Gix Media entered into a financing agreement with Bank Leumi Le Israel Ltd (“Leumi”), for the provision of a line of credit in the total amount of up to $3.5 million and a long-term loan totaling $6 million, which Gix Media used to finance the Cortex Acquisition (the “Financing Agreement”). On July 25, 2022, Gix Media and Leumi entered into an addendum to the Financing Agreement according to which Leumi will provide Gix Media with a loan of up to $1,500,000 to be withdrawn at the discretion of Gix Media by no later than January 31, 2023 (the “Additional Loan”). The Additional Loan was withdrawn in connection with the purchase of the additional 10% of Cortex’s share capital on January 17, 2023. On October 10, 2023, Gix Media and Leumi entered into a second addendum to the Financing Agreement (the “Second Addendum”), according to which, effective as of September 26, 2023, certain provisions, including among others, the conditions of the financial covenants contained therein and the interest rate quote, were amended according to the agreed terms between the parties.

2023 Loan Agreement

On November 15, 2023, Viewbix Ltd., the Company’s subsidiary (“Viewbix Israel”) entered into a Loan Agreement (the “2023 Loan”) with certain lenders (the “Lenders”) whereby the Lenders provided Viewbix Israel with loans in the aggregate amount of $480,000 (which sum may be increased to up to $1,000,000, at the discretion of the Lenders). In accordance with the terms of the 2023 Loan, the principal amount bears an annual interest at a rate of 9% and shall be repaid over the course of two years following January 1, 2024. In the event that Viewbix Israel fails to repay a part or all of the loan amount (including the accrued interest) and subject to certain conditions, the outstanding loan amount may be converted, at each Lender’s discretion, into shares of the Company’s Common Stock, at a price per share equal to the 30-day average of the closing bid price of the Common Stock, calculated as of such date the respective portion of the outstanding loan amount becomes repayable.

In connection with the 2023 Loan, the Company issued to each Lender a warrant to purchase shares of Common Stock (the “2023 Warrants”), such that the number of shares of Common Stock underlying each 2023 Warrant will reflect (one-for-one) the number of dollars provided by each Lender as part of the principal amount. Each 2023 Warrant has an exercise price per share of Common Stock of $0.50 and will expire and cease to be exercisable on December 31, 2025. The 2023 Warrants were issued to the Lenders pursuant to Regulation S of the Securities Act of 1933, as amended (“Regulation S”).

Reincorporation in Nevada

On September 27, 2023, our stockholders approved to grant to the Board of Directors the power to effect a reincorporation of the Company from the State of Delaware to the State of Nevada by way of a parent-subsidiary merger (the” Reincorporation”). The Reincorporation will be effected pursuant to an Agreement and Plan of Merger to be entered between the Company and Viewbix Inc., a soon to be formed wholly-owned subsidiary under the laws of the State of Nevada (the “Surviving Corporation”), which will provide that the Company, as parent in this transaction, will merge with and into the Surviving Corporation. Upon the consummation of the Reincorporation, the Company will cease its legal existence as a Delaware corporation, and the Surviving Corporation will continue the Company’s business as the surviving corporation under the name “Viewbix Inc.” succeeding to all of the Company’s rights, assets, liabilities and obligations, except that its affairs will cease to be governed by the Delaware General Corporation Law and will be subject to the Nevada Revised Statutes. In addition, as approved by our stockholders, upon completion of the Reincorporation, the Company will adopt an Articles of Incorporation and new bylaws under the Nevada Revised Statues, which will replace its current Certificate of Incorporation and Bylaws. As of the date of this Annual Report, our Board of Directors has not effected the Reincorporation. The Reincorporation remains subject to obtaining approval of a tax ruling from the Israeli Tax Authority. We anticipate the Reincorporation will take effect in the second half of 2024.

Corporate Information

We were incorporated in the State of Delaware on August 16, 1985, under a predecessor name, The InFerGene Company (“InFerGene Company”). On August 25, 1995, a wholly owned subsidiary of InFerGene Company merged with Zaxis International, Inc., an Ohio corporation, which following such merger, the surviving entity, InFerGene Company, changed its name to Zaxis International, Inc.

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Our principal executive offices are located at 11 Derech Menachem Begin Street, Ramat Gan, Israel, 5268104 and our telephone number is +972 9-774-1505. Our website address is www.viewbix.com.

Results of Operations

Results of Operations During the Three Months Ended March 31, 2024 as Compared to the Three Months Ended March 31, 2023

Our revenues were $10,002 thousand for the three months ended March 31, 2024, compared to $20,862 thousand during the same period in the prior year.

Our revenues from Cortex’s Content Platform were $7,530 thousand for the three months ended March 31, 2024, a decrease of $8,222 as compared to $15,752 thousand during the same period in the prior year. The reason for the decrease during the three months ended March 31, 2024, is due to a decrease of user traffic acquisition from Third-Party Platforms causing a lower amount of users to reach the Cortex Websites and thus decreasing the exposures to the ads displayed on the Cortex Websites, and an industry-wide decrease in advertising budget.

Our revenues from Gix Media’s Search Platform were $2,472 thousand for the three months ended March 31, 2024, a decrease of $2,638 as compared to $5,110 thousand during the same period in the prior year. The reasons for the decrease during the three months ended March 31, 2024, is due to the decrease in the amount of search referrals conducted by users, provided by Gix Media to search engines, caused primarily by changes and updates to internet browsers’ technology, which have caused a decrease in revenues from the direct model and a decrease in the number of searches received from Gix Media’s third-party strategic partners in the indirect model.

Our traffic-acquisition and related costs were $8,215 thousand for the three months ended March 31, 2024, as compared to $17,981 thousand during the same period in the prior year. The decrease of $9,766 thousand is due to the decrease in revenues from both the Content and Search Platforms during the three months ended March 31, 2024 as mentioned above.

Our research and development expenses were $730 thousand for the three months ended March 31, 2024, a slight decrease as compared to $796 thousand during the same period in the prior year.

Our selling and marketing expenses decreased to $658 thousand for the three months ended March 31, 2024, as compared to $723 thousand during the same period in the prior year. The reason for the decrease in the three months ended March 31, 2024, is due to the decrease of the costs incurred in the content platform mainly connected with content displayed on the Cortex Websites.

Our general and administrative expenses were $656 thousand for the three months ended March 31, 2024, a slight decrease as compared to $704 thousand during the same period in the prior year.

Our depreciation and amortization expenses were $734 for the three months ended March 31, 2024, and for the same period in the prior year.

Our other expenses for the three months ended March 31, 2024, were $20 thousand, compared to $0 thousand during the three months ended March 31, 2023. The reason for the increase in the three months ended March 31, 2024, is due to costs incurred in connection with the reincorporation in Nevada.

Our net financial expenses were $163 thousand for the three months ended March 31, 2024, a slight decrease as compared to $185 thousand net financial expenses during the same period in the prior year.

Our tax expenses were $1 thousand for the three months ended March 31, 2024, as compared to $84 thousand income tax during the same period in the prior year. The reason for the decrease during the three months ended March 31, 2024, is due to the decrease in income before tax.

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Liquidity and Capital Resources

As of March 31, 2024, we had current assets of $12,805 thousand consisting of $1,284 thousand in cash and cash equivalents, $86 thousand restricted deposits, $7,004 thousand in accounts receivable, $623 thousand in other current assets and $3,808 thousand in loan to our Parent Company.

As of March 31, 2024, we had non-current assets of $24,717 thousand consisting of $144 thousand in deferred taxes, $374 thousand in operating lease right-of-use asset, $230 thousand in property and equipment net, $11,715 thousand in intangible assets, net and $12,254 thousand in goodwill.

As of March 31, 2024, we had $15,900 thousand in current liabilities consisting of $8,407 thousand in accounts payable, $988 thousand in other payables, $6,422 thousand in short term loans and current maturities of long-term loans, $83 thousand in operating lease liabilities – short term.

As of March 31, 2024, we had $4,155 thousand in non-current liabilities consisting of $2,441 thousand long-term loans, $281 thousand in operating lease liabilities - long term and $1,433 thousand in deferred taxes.

As of December 31, 2023, we had current assets of $17,805 thousand consisting of $1,774 thousand in cash and cash equivalents, $149 thousand in restricted deposits, $11,359 thousand in accounts receivable, $771 thousand in other current assets and $3,752 thousand in the loan to our Parent Company.

As of December 31, 2023, we had non-current assets of $25,477 thousand consisting of $147 thousand in deferred taxes, $397 thousand in operating lease right-of-use assets, $245 thousand in property and equipment net, $12,434 thousand in intangible assets net and $12,254 thousand in goodwill.

As of December 31, 2023, we had $19,773 thousand in current liabilities consisting of $12,359 thousand in accounts payable, $889 thousand in other payables, $6,440 thousand in short term loans and current maturities of a long-term loans and $85 thousand in operating lease liabilities.

As of December 31, 2023, we had $4,885 thousand in non-current liabilities consisting of $3,064 thousand long-term loans, $304 thousand in operating lease liabilities - long term and $1,517 thousand in deferred taxes.

We had a negative working capital of $5,220 thousand compared to a negative working capital of $1,968 thousand as of March 31, 2024 and December 31, 2023, respectively.

During the three months ended March 31, 2024, we had positive cash flow from operating activities of $107 thousand, which was the result of $1,175 thousand in net loss, $648 thousand from positive adjustments to operating activities, and $634 thousands from positive changes in assets and liabilities items.

During the three months ended March 31, 2023, we had positive cash flow from operating activities of $12 thousand, which was the result of $345 thousand in net loss, $679 thousand from positive adjustments to operating activities, and $322 thousands from negative changes in assets and liabilities items.

There are no limitations in the Company’s Amended and Restated Certificate of Incorporation on the Company’s ability to borrow funds or raise funds through the issuance of shares of its common stock to affect a business combination.

Gix Media has provided several liens under the Financing Agreement with Leumi in connection with the Cortex Transaction, including: (1) a floating lien on Gix Media’s assets; (2) a lien on Gix Media’s bank account in Leumi; (3) a lien on Gix Media’s rights under the Cortex Transaction; (4) a fixed lien on Gix Media’s intellectual property; and (5) a lien on all of Gix Media’s holdings in Cortex.

As of March 31, 2024, the Company has also provided several liens under Financing Agreement with Leumi in connection with the Cortex Acquisition, as follows: (1) a guarantee to Bank Leumi of all of Gix Media’s obligations and undertakings to Bank Leumi, unlimited in amount; (2) a subordination letter on behalf of the Company to Leumi Bank; (3) a first ranking asset charge over all of the assets of the Company; and (4) a Deposit Account Control Agreement over the Company’s bank accounts.

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As of March 31, 2024, the Company is party to the 2023 Loan, which is in the aggregate amount of $480,000. In accordance with the terms of the 2023 Loan, the principal amount bears an annual interest at a rate of 9% and shall be repaid over the course of two years following January 1, 2024. In the event that Viewbix Israel fails to repay a part or all of the loan amount (including the accrued interest) and subject to certain conditions, the outstanding loan amount may be converted, at each Lender’s discretion, into shares of the Company’s Common Stock.

Going Concern

The Company experienced the Cortex Adverse Effect, a decrease in its revenues from the digital content and search segments as a result of a decrease in user traffic acquired from third party advertising platforms, an industry-wide decrease in advertising budget, changes and updates to internet browsers’ technology, and other changes in the online advertising industry. As a result of the foregoing, the Company’s operations were adversely affected.

While Cortex have successfully taken steps to implement certain adjustments to the business model in response to the Cortex Adverse Effect, the decline in revenues and other circumstances described above raise substantial doubts about the Company’s ability to continue as a going concern during the 12-month period following the issuance date of these Quarterly Report.

Management’s plans in response to these conditions include reducing operating expenses, creating new income sources, seeking additional liquidity opportunities to ensure the Company’s continued operations and raising funds through issuance of debt or equity from various potential investors. However, there is significant uncertainty as to whether the Company will succeed in implementing its plans, or be able to secure sufficient funds when needed.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Not required for smaller reporting companies.

ITEM 4. CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

As of March 31, 2024, the Company’s chief executive officer and chief financial officer, conducted an evaluation (the “Evaluation”) regarding the effectiveness of the Company’s disclosure controls and procedures (as defined in Rules 13a-15(e) or 15d-15(e) under the Exchange Act). Based upon the Evaluation, as required by Rules 13a-15 or 15d-15, the Company’s chief executive officer and chief financial officer concluded that, and pursuant to the Committee of Sponsoring Organizations of the Treadway Commission in Internal Control-Integrated Framework (2013), the Company’s internal control over financial reporting was effective as of the end of March 31, 2024.

Changes in Internal Control Over Financial Reporting

During the quarter ended March 31, 2024, there were no changes to our internal controls over financial reporting that have materially affected or are reasonably likely to materially affect our internal controls over financial reporting.

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PART II - OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

There are no pending legal proceedings to which the Company is a party or in which any director, officer or affiliate of the Company, any owner of record or beneficially of more than 5% of any class of voting securities of the Company, or security holder is a party adverse to the Company or has a material interest adverse to the Company. The Company’s property is not the subject of any pending legal proceedings.

ITEM 1A. RISK FACTORS

Our business faces many risks, a number of which are described under the caption “Risk Factors” in our Annual Report. Other than as set forth below, there have been no material changes from the risk factors previously disclosed in our Annual Report. The risks described in our Annual Report and below may not be the only risks we face. Other risks of which we are not yet aware, or that we currently believe are not material, may also materially and adversely impact our business operations or financial results. If any of the events or circumstances described in the risk factors contained in our Annual Report or described below occurs, our business, financial condition or results of operations could be adversely impacted and the value of an investment in our securities could decline. Investors and prospective investors should consider the risks described in our Annual Report and below, and the information contained under the caption “Forward-Looking Statements” and elsewhere in this Quarterly Report on Form 10-Q before deciding whether to invest in our securities.

We may not be able to retain and attract programmatic advertisers, and the associated payments received from such programmatic advertisers’ ads on websites which have been categorized as “Made for Advertising” may be adversely affected.

Certain recent developments relating to publishers that are categorized by a number of programmatic advertisers as “Made for Advertising” (MFA) sites, including decisions made by leading media programmatic advertisers to prioritize different media categories and implement publishing restrictions in connection with MFA, have negatively impacted Cortex’s business and operations. In connection with the foregoing, a significant customer of Cortex has decided to stop advertising on Cortex’s sites. Additional advertising customers of Cortex may opt to stop advertising on Cortex’s sites, which will impact Cortex’s, and as a result thereof, the Company’s current and future revenue streams and results of operations. The foregoing issues could lead to decreased advertiser interest in Cortex’s sites, potentially resulting in lower bids for ad space, and as a result thereof, lower revenues from Cortex’s business, and decrease in the Company’s results of operation.

We may not be able to receive credit facility to fund our operations, on favorable terms, or at all.

We generally finance our operations primarily through a combination of cash flow generated from operations and borrowings under our credit facilities, loans, and through credit with our vendors. Our ability to access capital through our existing credit facilities and raise additional capital by expanding our credit facilities on economically favorable terms (including available borrowing line and the rate of interest charged thereunder) or at all, or if we are in violation of our financial covenants in the future and do not receive a waiver, depends on our ability to stay in compliance with the Program. The Program poses certain limitations, as explained elsewhere in this Quarterly Report,. In addition, and as a result of the decrease in the Company’s revenues, our financial performance has been negatively impacted, which may affect the terms on which we are able to obtain credit facilities and loans.

If adequate capital is not available at the time we need it, we may have to curtail future growth or change our expansion plans, which could have a material adverse effect on us.

If borrowing under our existing credit facilities is reduced, or otherwise becomes unavailable, or we are unable to arrange substitute financing facilities or other sources of capital, our ability to fund our operations would be impaired, which would have a material adverse effect on our results of operations.

We may be unable to pay our obligations when they become due, including under the Program.

We have financed our acquisitions principally through the raising of debt, credit facilities, and our operations through credit with our vendors. Our ability to continue our operations and to pay our obligations, including under the Program (as described elsewhere in this Quarterly Report), when they become due is contingent upon obtaining additional financing.

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In addition, during August, 2024, we will be required to renegotiate the terms of the Program, which may result in the credit facilities being restricted, which may cause a delinquency in payments. As a result of such delays, the Company’s Gix Media’s and Cortex’s operations and revenues could be impaired.

If during August 2024, the bank does not continue its approval of the Program, or if the Company, Cortex and Gix Media cannot maintain compliance with the terms and covenant of the Program, or if we are unable to obtain sufficient amounts of additional capital, we may be required to reduce the scope of our planned operations, and/or consider reductions in personnel costs or other operating costs, in addition to the measures currently contemplated pursuant to the Program.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

None.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

None.

ITEM 4. MINE SAFETY DISCLOSURE

Not applicable.

ITEM 5. OTHER INFORMATION

None.

ITEM 6. EXHIBITS

(a) The following documents are filed as exhibits to this Quarterly Report.

Exhibit Number |  | Description
31.1* |  | Certification of Principal Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act
31.2* |  | Certification of Principal Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act
32.1** |  | Certification of Principal Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
32.2** |  | Certification of Principal Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
101.INS* |  | Inline XBRL Instance Document
101.INS* |  | Inline XBRL Taxonomy Extension Schema Document
101.CAL* |  | Inline XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF* |  | Inline XBRL Taxonomy Extension Definition Linkbase Document
101.LAB* |  | Inline XBRL Taxonomy Extension Label Linkbase Document
101.PRE* |  | Inline XBRL Taxonomy Extension Presentation Linkbase Document
104 |  | Cover Page Interactive Data File (formatted in Inline XBRL and contained in Exhibit 101)

* | Filed herewith.
** | Furnished herewith.

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

| VIEWBIX INC.
| By: | /s/ Amihay Hadad
| Name: | Amihay Hadad
| Title: | Chief Executive Officer
Date: May 20, 2024 |  | (Principal Executive Officer)

| By: | /s/ Shahar Marom
| Name: | Shahar Marom
| Title: | Chief Financial Officer
Date: May 20, 2024 |  | (Principal Financial and Accounting Officer)

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